State-Business Relations
State-Business Relations research
The current State-Business Relations (SBR) cluster lies at the heart of IPPG research. Our objectives are to understand:
- the nature of formal and informal interactions between the state and business, and how the institutions governing these have evolved over time
- the effects of different types of SBRs on measures of economic performance
- the conditioning factors affecting this relationship.
Research projects are under way in Africa (Ghana, Zambia, South Africa, and Mauritius, with work in Malawi also making a contribution) and in India.
There are three working hypotheses for the SBR study:
- it is possible to identify growth enhancing characteristics and functions of SBRs (at country level and perhaps beyond),
- it is possible to identify what drives effective SBRs, and
- it is possible to inform policy makers (in government, in business and donors) about effective SBRs (e.g. in terms of growth or pro-poor growth).
The Economics of State-Business Relations
State Business Relations (SBRs) embody formal and informal rules and regulations that are designed to perform economic functions, such as solving information-related market and co-ordination failures. Hence SBRs will affect the dynamic efficiency of the economy.
Effective SBRs can affect growth through fulfilling a number of economic functions:
- They can help to solve information-related market and co-ordination failures in areas such as skills development or infrastructure provision.
- Secondly, effective SBRs provide a 'check and balance' function on government policies and tax and expenditure plans.
- They may help to reduce policy uncertainty and contribute to increases in private investment.
To determine the effects of state business relations on economic performance, it is necessary to measure SBRs by condensing their essence into measurable variables across countries or firms, and over time. Our research on the economics of state business relations has proposed innovative ways to measure SBRs. It has used sophisticated econometric methods to address whether SBRs do affect economic performance at the macro and micro levels, independent of other factors.
The Politics of State Business Relations
Work on state-business relations also explores the political processes which shape and frame the institutional arrangements through which states and businesses interact.
We are particularly interested in tracing the origins and evolution of such institutions, both formal and informal, in different historical and structural contexts. Deploying historical institutionalist approaches, researchers set out to establish:
- when, how and where the SBR institutions emerged,
- which interests or organisations – on both the state and business sides – were involved in the formation, maintenance and change of the institutions,
- how they have developed over time, and
- the scope and focus of their functions.
Do these institutions promote effective and synergetic relations between states (or parts of it) and the private sector (or parts of it) which together promote growth and development? Or have they come to embody collusive, predatory or rent-seeking relations? In each, case why?
By bringing together economists and political scientists to undertake this work, IPPG is contributing directly to the practical study and promotion of positive state-business relations, and important findings are already emerging. For more details about the main project elements, please see:
For full details of the cluster see: Objectives, Work Plan and Communications Strategy, April 2008 – December 2009.Last modified: 29 April 2009